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Friday, October 7, 2011

Shop floor insights – winners and losers

One of the pillars of TOC is the "win-win" concept, which states that for every conflict a solution in which nobody loses is feasible (Please see the comment I got on this from Avraham Mordoch below). This stems from the very basic assumption or axiom that win-lose situations can't exist in real life. Compromises can exist only when the compromise is acceptable for the compromiser and in most cases both sides need to compromise to make the situation acceptable. When a compromise can't be achieved there are only two options: either everybody wins or everybody loses. No other option exists.

This axiom should be taken into consideration when creating any kind of incentive pay scheme. If your scheme is based on "one man's gain is another man's pain" you are setting yourself up for disharmony and loss.

So what happens when people get paid a commission based on their sales? As far as I could see we got less service to customers as it is considered bad manners to step into another worker's sale and we got quarrels when such step in accidentally happened. Sometimes even heated quarrels. Between people who have to work together day in and day out. When I asked about this I was told that when we compete against each other (the data was easily reviewed at all times) we become more motivated. If we see the other sales clerk has more sales, we'll push harder, if we see the other store has more sales – we'll push harder. But, as far as my logic goes – people buy what they want. Sales clerks have an impact, sure, but it is limited. If someone has lit a fire under me, the natural reaction will either be to push hard, which will turn off the buyers, or clam up, which will reduce service to the buyers.

I have to say that I find I get the best service at restaurants that use a tipping pool – all tips go into the pool and are then split between the entire shift staff. This means all the service staff has a vested interest in my pleasure and cooperation is beneficial for all. I am sure that the team members know who is free riding on them and quickly straighten such abusers. When tips are personal, service can still be great, but it is at risk.
My suggestion to that retail chain - pay comission based on store performance, then you'll have a team working together.